Art of the deal

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1:41BBC Sounds. Music, radio, podcasts. Wake Up To Money from BBC Five Live. Hello and welcome to Wake Up To Money. Donald Trump says he has signed the U.S.-Iran deal. We'll hear from our experts on what it could mean elsewhere in the programme. We'll hear from the boss of the company behind Cadbury and Oreos on why consumers don't always choose the healthier option. We, for instance, did a Cadbury 30 % reduced sugar here. It didn't sell. There you go. This weekend, thousands of defence firms will gather in Paris to showcase their products and services. We'll speak to a British aircraft company that's hoping to win business there.

2:20And that's the sound of England fans at a Dallas bar where England played its opening World Cup match against Croatia last night, a match it won 4-2. We'll chat to the businesses at the heart of the action. Wake Up To Money from BBC Radio 5 Live. Good morning. Welcome to Wake Up To Money. It is Thursday the 18th of June. It is just seven minutes past five. And I'm sure lots of you are a little bleary-eyed this morning if you're listening live. But nobody's complaining after a 4-2 win over Croatia. We'll get into it all. And as I mentioned, we're going to go to Dallas to see the fans' reaction there.

2:56That'll be fun. With me this morning, Wayne Chapman, UK Chief Executive of the global logistics firm Stasi UK. Wayne, are you feeling a bit bleary-eyed? Did you stay up for the match? I did stay up for the match, I've got to admit, but certainly feel better after that performance than I would have if we'd have drawn or lost. So very happy with that. That's it. You know, we don't need to sleep. All we need is just some invigorating football to watch. Absolutely. Yeah, that's clearly the case. Yeah, very, very happy. And yes, certainly feeling better than I would be. So yeah, thank you. Wayne, remind us, Stassi, it's, you know, your business is actually quite involved in World Cup and the logistics behind that.

3:39And, you know, all the businesses essentially that consumers, they're interacting with. You're kind of the behind the scenes in that, aren't you? Yeah, that's right. So we're a multi-channel fulfillment business. So all that simply means is we receive products from our clients, we store them in our warehouses and send them out to clients and consumers. So one of our activities is marketing fulfillment. So we're the largest marketing fulfillment provider in the UK. So that's sending out branded materials out into into shops and bars and restaurants. So we've got about 90 % of the drinks market in the UK.

4:17So if you were in a pub last night, then there's a 90 % chance that the glass that you were drinking your pint out of was probably from one of our warehouses and all of the marketing materials in the pub would have been distributed from one of our warehouses. So it's a very busy time of the year for us. There you go. A proud moment, actually. That's pretty cool. That's a pretty cool way. Yeah. Also with us this morning, Catherine Hannan, Investment Manager at ORBC Brewing Dolphin. Good morning, Catherine. Did you stay up? Good morning. I stayed up for half the match. So Ireland is obviously very disappointed.

4:50We're not getting a run out at the World Cup. Listen, Catherine, I feel you. I know you do. But we were cheering on our neighbours and I went to bed quite early last night and it was very tense at halftime. I think it was 2-2 when I left it. But I could hear my husband cheering downstairs as I heard. other goals come in. So yeah, it was a good night for England. I know it's an interesting one, Catherine. We might be disowned at home, but you know, we want England to do well, especially if you live here. I wonder from an economic perspective, hearing what Wayne was saying, do investors see that kind of promotional spending as a sign of confidence or as a sign companies are having to work harder for every sale these days?

5:31So I think it's probably a mix of both. But I think in the kind of immediate and near term, the benefits of having a world cup in a local economy are quite palpable like the the goodwill and the kind of excitement and you know trickles down into the consumer they make positive decisions for the economy like going out to celebrate having another meal having a couple of drinks spending a little bit more i think fifa projects that the u.s economy will you know garner about 17 billion in terms of US GDP as a boost and 185 ,000 jobs. Now, as I said, that's kind of a temporary boost around all the infrastructure that's involved in like hosting and putting on such an amazing and fantastic competition.

6:15But yes, there is an immediate feel good economic benefit to the local economy, wherever a competition that size and that scale globally is taking place. There you go, Catherine, we need the feel good. Well, we're going to get back to that later on the programme so if you're listening in stay tuned. But our top story this morning, the United States and Iran have signed an initial agreement aimed at ending the war, a conflict that has disrupted global shipping, it's pushed up energy prices, it's added to fears about inflation. We've talked about it a lot on Wake Up To Money and this deal includes the reopening of the Strait of Hormuz and the lifting of US sanctions on Iran but some of the most difficult questions have been left for today.

6:57Our business correspondent Archana Shukla is with us now. Archana, good morning. Good morning, Liana. You seem pretty happy with the performance in the football. I was. You know what? I want them to do well. I do want them to do well. Absolutely. It's a feel good for everybody. But listen, Archana, I feel as if we need to get through this deal. You chewed through it a little bit. You've read through it. I'm still a little bit confused as to whether this is a 60-day deal or is this something that's going to last a bit longer? Well, at least the 60 days is kind of signed and agreed upon. Final signings, et cetera, would happen today.

7:36But let's talk about the first 60 days because there are a lot of things that need to be sorted in these two months for the formal and the long-term perspective. But in the 60 days, what they've said is Iran would restore traffic through the straight-of-formals, something which is crucial for energy supplies and also for global trade, and even food security for that matter, because fertilizers also pass through that. And that, you know, there would also be, you know, Iran would agree to, you know, going forward also look at their nuclear programs. There would be a long-term discussion around that.

8:17Sanctions on Iran would be lifted if they agree on terms on their nuclear program as well. But the most crucial that I think world over businesses, economy and even general public are looking forward to is opening of that Strait of Hormuz, which, you know, the deal says would be open. However, Donald Trump clarified that the initial opening would be to remove the mines, which would make it safer for ships to pass it. So actually, when the full scale commercial shipping would resume is something which is still unclear. But it certainly has given hopes that, you know, you know, the ships that are stuck there would start moving in.

8:52And we've already seen oil prices react to that. Markets react to that. There is a positive impact already. There are hopes that all of this would start moving through and, in fact, would impact prices around the world as well. Another part to this, Archana, that I'm quite interested in is this$300 billion reconstruction program. What is that and who is expected to provide the money into it? You know, that question is really unanswered. answered. Iran, you know, both of them possibly have agreed that Iran needs that money to reconstruct. There are a lot of domestic issues, infrastructure that has been destroyed, which needs to be rebuilt for the people there in Iran, and also for economic activity to start resuming Iran, within Iran.

9:39But who pays for that is yet not answered. The United States later has clarified that U.S. will not pay for it, but who does? That really is a big question mark. But it's somewhere is also an indication that possibly the United States has gone down a path where they've agreed on a lot of terms that Iran wanted. Another one that they have got agreed upon is a removal of sanctions on their oil. So once this deal is signed through tomorrow, Today, tomorrow, Iran can start selling its oil in the market and start filling their coffers again. So that again would be a positive for Iran from the economic perspective, although the larger sanctions possibly will go away only once the 60 day period is over.

10:26And they've agreed upon the larger goals of this deal. Yeah, it's an interesting one. Not all the sanctions are gone, but it seems as if the US are going to hold some of the sanctions over them to make sure that Iran are doing what they want, essentially. Yeah, absolutely. But, you know, most of the analysts, when they're reading word to word, there would be a lot of, you know, people reporting over this document word to word to understand what it is. But many say that possibly Iran has got the better off the deal as compared to to the United States, because even before the war started, Iran had agreed that they would work with the U.N.

11:04team to to dilute the uranium enriched aspect of the nuclear program. And that is what they've agreed now. So there isn't anything new. But what what is happening is they are getting, you know, hopes and a positive signal that the sanctions could be lifted. They're getting a promise of around a 300 billion dollar support globally for reconstruction within Iran. They can sell oil in the global market, something which will really help Iran build back some of the lost economic power. And also, Iran has very clearly said that they would continue to, you know, charge a fee after the 60 day period gets over.

11:44They would continue to charge a fee on the Strait of Hormuz. Now, the big question is, does that mean that Iran still has control over the Strait or, you know, is there other agreement on that? So, yeah, a lot of questions still to be answered there. A lot of questions. Well, Archana Shukla, thank you so much for joining us and going through all that. Listening is Niamh McBurley, Head of Political Analysis for Middle East and North Africa at Control Risks. She is based in Dubai. Niamh, good morning. Good morning. Lovely to speak to you. Great to speak to you because I want to ask you how much confidence should businesses place in this agreement?

12:21Well, the signing of the agreement is absolutely pivotal to give businesses any confidence that the next couple of months will be a much calmer regional environment in which to operate in. And for those who aren't already here, whether that's across the GCC, Jordan, Israel, that they can enter the markets safely so that it has been signed and signed ahead of schedule effectively. And we're expecting in Geneva for there to be a meeting or elsewhere in Switzerland tomorrow to probably begin the next phase of this, that really positive direction of travel is fundamental to reassuring businesses across the region that, you know, will have a calm a couple of months and that economic activity can go back to where it was and ideally be even stronger as well.

13:17When you're analysing this, it's only been a couple of hours actually, So, you know, it's taken, you know, there's still a lot of questions unanswered, as Archana said. But are there gaps in this that just stand out to you? There are a number of challenges in the document. You know, a number of those have already been pointed out. The questions over the references to sanctions. Does this mean all of the sanctions against Iran? Does it mean all the terrorism sanctions? How acceptable is that going to be to external stakeholders who haven't really been able to influence this process, like members of Congress in the US, Israel, you know, other external stakeholders?

14:00they're going to want to have a say about this. But I think what's been fascinating about this process is how narrowly it's been negotiated. And what I want to reinforce is the considerable political will across the Gulf region to support the finalizing of the text and the signing of the text as we now have to make sure that the war is ended. And ultimately, that's what this text does. It merely ends the war. it frames some of the conditions to ensure the resumption of activity through home wars. But as you said earlier, the bigger questions are yet to be negotiated. And we're expecting the negotiations in the second phase on nuclear to go on for quite some time.

14:4460 days is a drop in the ocean. There will be multiple extensions, but that's definitely for both sides. But there are other questions as well. A very, very interesting reference to the possibility of waterway management for Hormuz, and the text refers to all of the Gulf littoral states, which would be GCC member states and Iraq. That to a lot of people will seem like an affront to UN CLOS regulation over freedom of navigation. However, there is some appetite in the region to see multilateral engagement on issues that affect the waterway, things like environmental protection, things like joint Coast Guard activity.

15:29Those are the types of things we could see emerge that don't exist already under this new management structure. So I would kind of caution listeners to not jump to conclusions too quickly on that element. But of course, when we come to the nuclear components of this that have been cited in the agreement, major question marks as to what the US is willing to concede and also what Iran is willing to concede as well. So significant gaps that could be also significant areas that need working out. But we will wait and see. Niamh, I wonder what your opinion is on this agreement that includes a proposed 300 billion reconstruction programme is there a realistic appetite among Gulf countries or international companies to actually finance that?

16:21The US says it's not going to give any money into it. It's an excellent question. And I think when the news of this was being trailed a couple of weeks ago, although there was no certainty around the number, it was implied that the US would invest. And then President Trump said yesterday, quite conclusively, that the US wouldn't. although given the size of the Iranian market and the potential there, I wouldn't rule out the possibility of U.S. involvement. You know, the realization of the size of the market may change minds. The idea of regional and well, certainly regional investment into Iran is not new.

17:00There were talks in the region after the signing of the rapprochement deal between Iran and Saudi Arabia and Beijing in March 2023 about a similar type of mechanism that would allow the Gulf states in particular to invest in in certain areas in Iran, although those were going to only be the ones that were excluded from sanctions, so such as food and and health care and other areas. I mean, areas where where Gulf states actually have have great products to offer. So this isn't a new idea, but the number is really quite staggering. $300 billion is a great deal of money. There will certainly be some interest from international investors in the oil and gas sector, but they will rightly be very cautious because of the conditions that some of the European majors faced after the signing of the JCPOA in 2015.

17:55They tried to increase their investments in Iran, and it all went pretty wrong. So there are many unanswered questions, but there is appetite because of the opportunity that will be available. There's a great deal of trust building both politically and then between business and government in Iran. And ultimately still questions about if you're doing business in Iran, who are you doing business with? And understanding your partners, your stakeholders, not just the first one or two directors of the company, but further down the line is going to be very, very important, particularly if we continue to have terrorism sanctions on Iran from the US.

18:32Niamh, really, really interesting. Niamh McBurney, Head of Political Analysis for Middle East and North Africa at Control Risks. She's based in Dubai. Thank you so much for joining us. Now, Catherine, I want to bring you in on this because oil prices have fallen. Can you just give us the numbers and where is Brent crude at now? Yeah, of course. on the back of those two really detailed reports about how the landscape has changed so quickly, but the challenges that are posed as well. The market is pretty optimistic. Brinkrude, which is the international price benchmark, that was down about 0.7 % yesterday at$78.44, whereas the more domestic US West Texas Intermediate, they were down about 1.1 % to$75.18.

19:15And a bit like buses, just as the news all comes at once, the IEA, which is the International Energy Agency, also had a report out this week. Interestingly, they slashed their global oil demand outlook for the year. They're saying that higher prices will continue to weigh in consumption. But they also said that a post-war supply rebound, which could happen given everything that's happened over the last 24 hours, could lead to an oil glut in 2027. So as you can imagine, if we reopen all the infrastructure, if we rebuild the infrastructure that is damaged and tankers get moving quite quickly, inventories get restocked, we could get to a place quite quickly where there is, you know, the term glut is quite extreme.

20:01but there certainly is a supply match and some excess then given the reproduction that needs to get started in the Middle East over the next couple of months. All of this is going to take time, like supply normalisation is not going to take place over the next couple of weeks. It will take months and therefore the market from a macro perspective is certainly taking great comfort from the fact that the geopolitical tensions have passed. There is, you know, notwithstanding all the challenges that we've talked about there, there does seem to be a route to a more normalised oil price environment. And markets are forward looking instruments.

20:43They are taking the view that there is going to be some normalisation down the line. As I said, notwithstanding all the challenges the last two speakers mentioned. Absolutely. It's never straightforward. This is Catherine. No. Listen, we'll talk a little bit more about that later on in the programme. Now, one of the world's biggest food companies says consumers don't always choose healthier options, even when they taste exactly the same. Mondelez is the company behind Cadbury, Oreo and Toblerone and says a reduced sugar version of Cadbury chocolate failed to take off despite years of research.

21:15I spoke to its chief executive, Dirk van der Poot, about the food industry's role in helping people eat more healthily. I started by asking how much responsibility for healthy eating lies with consumers and how much was with the food industry. Both have a responsibility. I think that we certainly as an industry have a role to play. As science becomes more developed, we need to adapt to it. And we, of course, live in line with all regulations that exist around the world. And as they change, we try to adapt to them. But I think we also need to be realistic. I think there's only at a certain pace we can make those changes.

21:51It's not always easy to make them. So I think there we would need more dialogue. I would say as it relates to what's in the product, yeah, constantly improving the products, reducing sugar, taking out any ingredients that consumers don't understand. Often they're there because the regulation demands that they're there. They might not have the most appealing name, but they're there because it's required. But working that gradually and improving constantly the food that we make, that's certainly a responsibility we have to take. We embrace it. Of course, we want to do that. But it needs to happen in a dialogue, I think, not unilaterally.

22:31And then we have to deal with the consequences. When you talk about investing millions and reformulating those products to meet the HFSS requirements, if the regulations were scrapped tomorrow, would you still have made those reformulations? Yes, probably, yes. I would say. Why? Because I believe that if we can make our products healthier, it's a balance for us. Of course, we are a public company. We need to deliver profit. I mean, I won't hide behind that. It's very important. But the day that we know that we can still fulfill that financial objective that we have and do well and make our products healthier, there's no reason why we would not do that.

23:11And in a way, it's not bad that everybody has to go at the same time. That evens the playing field, I would say. Because sometimes we, for instance, did a Cadbury 30 % reduced sugar here voluntarily. It didn't sell. And you could not taste the difference between normal Cadbury and 30 % less sugar. But the consumer, just of the fact that they realized it was 30 % less sugar, they didn't want it. So it was two years of research down the drain. So that's why I'm saying education is very important and keep on trying to do the right thing. And over time, I think the new generations, I can see it. The younger generations are much more concerned about how they eat, they drink less.

23:51So there is a change happening. And I think it's coming from the awareness that they have. Europe is your biggest market. So, you know, when you're at the center of so many shocks, when you've got war, energy prices, inflation regulation, has Europe become a more difficult place to do business? Yes. Not only would I say it affects your supply chain, it affects also consumers. I think consumer confidence around the world at the moment, how people feel about the future is amongst the worst that I've seen it in my career. And I've got a 30 year career. They don't feel good about the future. Certainly there's war again.

24:26The Russia-Ukraine conflict keeps on going. Now we got this one. You've got global inflation. So people don't feel good. It also affects the economy. So job security and job creation is starting to be affected. So it certainly has become much more difficult to do business. And if I reflect on that 30-year career, I would say this has been probably the toughest two years that I've seen. In fact, I just got news this morning that our office building in the Ukraine got hit. No, everybody's safe. They're fine. It was on another floor. But yes, it's the reality of the situation. Our plant got hit. We have two plants there.

25:07One plant got hit twice. We've rebuilt it twice. First time it was real serious. Tens of millions of dollars of reinvestment. We've agreed that we will rebuild every single time there. So we keep on investing in the country. We doubled everybody's salary when the conflict started and we have not fired anybody. So we're committed there. But for the people that work there, it's yeah, it's every day there's danger. And so it's very difficult for me to completely comprehend that, what it's like. I mean, being in the office and suddenly there's a drone attack. That's not something that we're confronted with all day to day.

25:43And I have to say for the people over there that are so dedicated to the company, I really appreciate that. I guess on the flip side of that, Mandelaise chose to continue operating in Russia. Now, you suspended new investment in advertising there. But do you still believe that that was the right decision? Yes, yes. So leaving Russia would probably have left 3 ,000 of our people without the job and probably 10 ,000 farmers. I know it's heavily discussed and it's not an easy decision. Can we be criticized for that? Yeah, of course. We pay taxes in Russia. That helps the war. I'm not pleased about that.

26:20But I also believe that if we would have seeded, they would have confiscated our plants. It would have probably given them a much bigger source of income, keep on selling our products to fund the war. So I feel that in the end, it's not the most popular decision, but I think it was the right decision. Yeah, I know. And continuing to operate there is a choice. But it's interesting as well as a CEO, it's almost a moral choice. Yeah, it is tough. I am not a big fan of CEOs taking big political stances. That's not me. That's more who I personally am. And yes, it is a moral choice. And if it was just me, maybe the decision would have been different.